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3 hours ago, Baron Barracuda said:

In the past three years despite issuing millions of new shares Royal's stockholder equity has shrunk from $12B to $4B.  Haven't read through the boilerplate on their many debt issues but have to be concerned about what level of capital they need to maintain to satisfy debt covenants.  Further operating (not cash flow) losses could force them to issue additional shares and in a weak stock market any offering would take place at a price below the current market price.  This would not be good for current shareholders.

 

I'm into distressed debt.  🙄  Love the 'cycles and event driven opportunities also in the short-term for equities.

 

The major public cruise line debt 'structure' or 'portfolio' is very, very, very (yes 3 times) complex; with tiers stratified for senior unsecured (really secured by everything, however, not specifically sub-secured; i.e. by island, ship, port, etc.), ship or groups of ships, islands, port asset etc.  

 

It is really unique, and very complex.

 

An uncontrolled (i.e., NOT a pre-agreed upon plan or prepack) reorganization would be a */+-&^&$.

 

RCL appears to be between CCL (possibly 'too big to sail') and NCL (too small and too concentrated on North American based revenues).  CCL is so big the sub-parts could essentially be disembarked (i.e., sub-lines); but it is a nightmare if it unfolds unorganized.  NCL is so small it might be an easy target (MSC or foreign sovereign fund) but at less that the current debt load and a total hit to equity (as with CCL).

 

RCL, by a hanging thread IMO.

 

 

Edited by At Sea At Peace
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On 5/12/2022 at 5:31 PM, At Sea At Peace said:

 

I'm into distressed debt.  🙄  Love the 'cycles and event driven opportunities also in the short-term for equities.

 

The major public cruise line debt 'structure' or 'portfolio' is very, very, very (yes 3 times) complex; with tiers stratified for senior unsecured (really secured by everything, however, not specifically sub-secured; i.e. by island, ship, port, etc.), ship or groups of ships, islands, port asset etc.  

 

It is really unique, and very complex.

 

An uncontrolled (i.e., NOT a pre-agreed upon plan or prepack) reorganization would be a */+-&^&$.

 

RCL appears to be between CCL (possibly 'too big to sail') and NCL (too small and too concentrated on North American based revenues).  CCL is so big the sub-parts could essentially be disembarked (i.e., sub-lines); but it is a nightmare if it unfolds unorganized.  NCL is so small it might be an easy target (MSC or foreign sovereign fund) but at less that the current debt load and a total hit to equity (as with CCL).

 

RCL, by a hanging thread IMO.

 

 

 

Between RCL, CCL and NCL, having noted the extended losses and continued 'push further out in time' estimated returns to 'cash positive' sailings and operations (not net income), all bringing on more and more ships, increasing supply and capacities, with a still leery cruising customer and lower demand, CCL is clearly the first to see it clearly that they don't have the liquidity to sustain 12-months, and that is with no further (or eventual) Covid negative impacts heading into the Fall and Winter.

 

CCL announces the pricing of another $1,000,000,000 in senior unsecured debt (don't be fooled by the use of the term 'unsecured' in that)  The stated rate is 10.5% (which gives a negative indication of the return to the high risk assessment of the limitation of the sale to qualified institutional investors).

 

https://www.carnivalcorp.com/news-releases/news-release-details/carnival-corporation-plc-announces-pricing-10-billion-senior

 

 

Carnival Corporation & plc Announces Pricing of $1.0 Billion Senior Unsecured Notes due 2030 to Refinance 2023 Maturities
 

MIAMI, May 18, 2022 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) today announced that Carnival Corporation (the "Company") has priced the private offering of $1.0 billion aggregate principal amount of 10.5% senior unsecured notes due 2030 (the "Senior Unsecured Notes"). The offering of the Senior Unsecured Notes is expected to close on May 25, 2022, subject to customary closing conditions.

 

The Senior Unsecured Notes will pay interest semi-annually on June 1 and December 1 of each year, beginning on December 1, 2022, at a rate of 10.5% per year and are callable beginning June 1, 2025. The Senior Unsecured Notes will be unsecured and will mature on June 1, 2030.   

The Senior Unsecured Notes will be fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by Carnival plc and certain of the Company's and Carnival plc's subsidiaries that own or operate vessels and material intellectual property and that guarantee certain of the Company's other indebtedness, including its first-priority secured indebtedness and second-priority secured indebtedness.

 

The Company expects to use the net proceeds of the offering to make scheduled principal payments on debt during fiscal 2023 and for general corporate purposes, including, without limitation, making repayments of its indebtedness, the financing or refinancing of a portion of the purchase price, rental payments, costs and expenses related to certain of its current and future property, plant and equipment (including leased assets and vessels) and their maintenance, repair, replacement and improvements, as well as any other payments related to its vessels' ready-for-sea costs, in each case to the extent such amounts are not covered by the Company's existing and future export credit facilities.

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A little carnage today hitting the current 52-week low.  RCL, NCLH and CCL all taking a beating. 

 

Appears to be related to comments referenced in an article from theStreet.

 

https://www.thestreet.com/investing/why-you-may-see-cheaper-royal-caribbean-carnival-cruises#:~:text=Cruise Lines May Need to,quoted the analyst as saying.

 

This particular sub-reference to a Travel Weekly quote is interesting and appears to run against the 'grain' of what the CEO's have been projecting about pricing.

 

Cruise Lines May Need to Lower Prices

 

Cruise lines -- Royal Caribbean and Carnival were not called out specifically -- "will have to lower prices in the second half of 2022 to fill ships because cumulative bookings are 'in a deep hole' compared with 2019 levels," Travel Weekly quoted the analyst as saying.

 

Travel Weekly notes 2023 prices might have to be discounted also to fill the ships (gives an advantage to NCL with its perceived higher percentage of coverage identified as 'luxury' cruises).

 

https://www.travelweekly.com/Cruise-Travel/Truist-Securities-report-falling-cruise-prices

 

2023 cruise prices could fall, too

 

Scholes wrote that 2023 pricing is holding for now, but that the new year is seven months away and current booking trends don't look good. He wrote that the booking pace for 2023 "continues to decelerate and is significantly below comparable 2019 levels." 

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30 minutes ago, At Sea At Peace said:

A little carnage today hitting the current 52-week low.  RCL, NCLH and CCL all taking a beating. 

 

Appears to be related to comments referenced in an article from theStreet.

 

https://www.thestreet.com/investing/why-you-may-see-cheaper-royal-caribbean-carnival-cruises#:~:text=Cruise Lines May Need to,quoted the analyst as saying.

 

This particular sub-reference to a Travel Weekly quote is interesting and appears to run against the 'grain' of what the CEO's have been projecting about pricing.

 

Cruise Lines May Need to Lower Prices

 

Cruise lines -- Royal Caribbean and Carnival were not called out specifically -- "will have to lower prices in the second half of 2022 to fill ships because cumulative bookings are 'in a deep hole' compared with 2019 levels," Travel Weekly quoted the analyst as saying.

 

Travel Weekly notes 2023 prices might have to be discounted also to fill the ships (gives an advantage to NCL with its perceived higher percentage of coverage identified as 'luxury' cruises).

 

https://www.travelweekly.com/Cruise-Travel/Truist-Securities-report-falling-cruise-prices

 

2023 cruise prices could fall, too

 

Scholes wrote that 2023 pricing is holding for now, but that the new year is seven months away and current booking trends don't look good. He wrote that the booking pace for 2023 "continues to decelerate and is significantly below comparable 2019 levels." 


almost time to buy the dip.   I missed the times when they were 7.00 and 20.00   

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I went back to RCL to take my first stake today since late 2021. As I said in my earlier post I was expecting it goes down around 50 and lower. My next planned purchase would be around 35 (also suggested in my pervious post).

 

I still see RCL has greater advantage against CCL. RCL has more mega ships. So if staff shortage becomes severe or long lasting problem, RCL can restrict capacity still be able to sell more cabins on a megaship. Whereas CCL's medium and big sized ship would have to block significantly number of cabins and make it really low capacity. The math is RCL's megaship would have more capacity and more staff members to start with. I won't go into details to explain why but I am sure many of you would either agree or disagree. 

 

What I found interesting is that almost all cruise lines are selling close-in sailing really cheaply, while kept price artificially high for cruise that are 3-8 months away. This reminds me of last year as well. I fully agree with some points made in the article cited by @At Sea At Peace, personally I don't know when this revenge travel trend would fade, but from the latest figure from British domestic travel demand, I would not rule out that the revenge travel on cruises are fading a bit. It is extremely difficult to forecast near future to mid term demand. So the pressure to sell cabins even cheaper nearer departure is high. 

 

We also see cruise lines trying to raise price on packages (drinks, speciality dining...) to compensate lower cabin fares. Carnival is charging delivery of daily programme (apparently). All these however may further alienate its loyal customers and depress sales. 

 

However, I do not agree that NCL will hold any better. What NCL's other brands is not really 'luxury-luxury' except Regent Seven Seas. Oceania is not so with its inside cabins and lower pricing point. If stock market crash really hard and we have a hard-landing, NCL may have a real hard time. For one thing, luxury goods holds well in recession, but luxury cruise line is not the same. First of all, people that seek luxury liners touring around the world may not feel safe to travel to exotic places. A luxury line takes people around Florida coast is not very attractive as many of the customer almost guaranteed to be able to purchase leisure crafts or owns few. Second, a hard landing affects anybody and everybody. A rich man will still buy luxury goods (watches, hand bags) to please his other half, but I doubt any rich people would please his/her other half by taking a luxury cruise in the remote African/Asian coast, except very few adventurous minded or cruise die hard. The demise of Crystal is a perfect example. 

 

So that goes back to my original assessment that RCL will be one of the fittest to survive. It will need to be smaller, possibly offload a few inefficient older ships. The stock price will take a further hit. But I still think it can do better than CCL. And NCL? It should call itself lucky if it is not bought by another company or going private. 

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44 minutes ago, Ptroxx said:


almost time to buy the dip.   I missed the times when they were 7.00 and 20.00   

 

Not yet, there is still lots of room below $50.

 

IMO this won't turn around until Covid quarantining is no longer common practice. 

 

Shorts still hold the winning hand. 

 

 

 

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31 minutes ago, BermudaBound2014 said:

 

 

Not yet, there is still lots of room below $50.

 

IMO this won't turn around until Covid quarantining is no longer common practice. 

 

Shorts still hold the winning hand. 

 

 

 

I think the current economy is a much bigger factor than Covid quarantine. Cruising is considered a luxury by most people’s standards. This is considered discretionary spending and is what most people cut back on when money gets tight. This could lead to cutting back on onboard spending, cut back on number of trips, or even stop cruises in altogether.

As far as cutting prices, they’ve held prices at a very high level through this whole mess, and I don’t know if a leopard can change it’s spots now.

 

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1 hour ago, grandgeezer said:

I think the current economy is a much bigger factor than Covid quarantine. Cruising is considered a luxury by most people’s standards. This is considered discretionary spending and is what most people cut back on when money gets tight. This could lead to cutting back on onboard spending, cut back on number of trips, or even stop cruises in altogether.

As far as cutting prices, they’ve held prices at a very high level through this whole mess, and I don’t know if a leopard can change it’s spots now.

 

 

I certainly don't disagree that the recession/depression is factoring into the tanking cruise stock. It's yet another nail in a very long list of very unfortunate circumstances. 

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Cruise lines initially enjoyed some pricing power after re-start.  They had fewer ships sailing and were limiting passenger loads.  There were also a large number of FCC's outstanding with limited expiration dates.  Now, as supply and demand approach equilibrium with all ships returning to service and load factors creeping back toward normal we'll see what level of pricing the market allows. 

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3 hours ago, ChC said:

I went back to RCL to take my first stake today since late 2021. As I said in my earlier post I was expecting it goes down around 50 and lower. My next planned purchase would be around 35 (also suggested in my pervious post).

 

I still see RCL has greater advantage against CCL. RCL has more mega ships. So if staff shortage becomes severe or long lasting problem, RCL can restrict capacity still be able to sell more cabins on a megaship. Whereas CCL's medium and big sized ship would have to block significantly number of cabins and make it really low capacity. The math is RCL's megaship would have more capacity and more staff members to start with. I won't go into details to explain why but I am sure many of you would either agree or disagree. 

 

What I found interesting is that almost all cruise lines are selling close-in sailing really cheaply, while kept price artificially high for cruise that are 3-8 months away. This reminds me of last year as well. I fully agree with some points made in the article cited by @At Sea At Peace, personally I don't know when this revenge travel trend would fade, but from the latest figure from British domestic travel demand, I would not rule out that the revenge travel on cruises are fading a bit. It is extremely difficult to forecast near future to mid term demand. So the pressure to sell cabins even cheaper nearer departure is high. 

 

We also see cruise lines trying to raise price on packages (drinks, speciality dining...) to compensate lower cabin fares. Carnival is charging delivery of daily programme (apparently). All these however may further alienate its loyal customers and depress sales. 

 

However, I do not agree that NCL will hold any better. What NCL's other brands is not really 'luxury-luxury' except Regent Seven Seas. Oceania is not so with its inside cabins and lower pricing point. If stock market crash really hard and we have a hard-landing, NCL may have a real hard time. For one thing, luxury goods holds well in recession, but luxury cruise line is not the same. First of all, people that seek luxury liners touring around the world may not feel safe to travel to exotic places. A luxury line takes people around Florida coast is not very attractive as many of the customer almost guaranteed to be able to purchase leisure crafts or owns few. Second, a hard landing affects anybody and everybody. A rich man will still buy luxury goods (watches, hand bags) to please his other half, but I doubt any rich people would please his/her other half by taking a luxury cruise in the remote African/Asian coast, except very few adventurous minded or cruise die hard. The demise of Crystal is a perfect example. 

 

So that goes back to my original assessment that RCL will be one of the fittest to survive. It will need to be smaller, possibly offload a few inefficient older ships. The stock price will take a further hit. But I still think it can do better than CCL. And NCL? It should call itself lucky if it is not bought by another company or going private. 

Let me know when it gets down to $25 again. Big improvements in staffing/service on non-mega ships will have to happen to keep their regular cruisers happy.

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3 hours ago, grandgeezer said:

As far as cutting prices, they’ve held prices at a very high level through this whole mess...

 

Except for all those buying at the low price, just after final payment when unsold cabins are returned by TAs. Lots of $50/night bargains out there!

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On 5/6/2022 at 1:10 PM, At Sea At Peace said:

 

Going forward, they are all in for a nasty ride after what hopefully will be a really decent summer.  

 

Over Supply and Under Demand with Supply Increasing

 

Inflationary Impact on Flying, Driving and/or Hotel Costs To and From a Cruise

 

Massive Inflationary Impact on Cost of Operations - Food and Supplies

 

Extraordinary Inflationary and Supply Stretched Cost of Diesel Fuel - 80,000 Gallons a Day (Large Ships) Depending on Diesel Fuel type (other CC members are more versed in such)

 

 

Looks like the omen not so good given the factors.

 

1 hour ago, Baron Barracuda said:

Cruise lines initially enjoyed some pricing power after re-start.  They had fewer ships sailing and were limiting passenger loads.  There were also a large number of FCC's outstanding with limited expiration dates.  

 

Yep.

 

1 hour ago, Baron Barracuda said:

Now, as supply and demand approach equilibrium with all ships returning to service and load factors creeping back toward normal we'll see what level of pricing the market allows. 

 

Again, back to the top to agree, there will be too much supply after the summer run; with an add that the summer run predicted includes late pricing reductions of some magnitude.  The demand isn't there.  Too many new ships in the blocks; all pre-pandemic perfectly fine business plans totally savaged by the realities of the pandemic, then geo-national conflict, add massive government spending and the resulting record inflation coupled with shortages.  Too much.  Rationing (either of purchase or of neo-alternatives in disguise aka # of days commuting limitations and the like) around the corner in the West.  Ugh (for equities).

 

The spreadsheets are being sharpened with the security interests in the holding companies, ships, islands and general unsecured creditors under the microscope.  I'm not really sure this will play out very cleanly.  The debt structures are so intricate and complex.

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2 hours ago, Baron Barracuda said:

Cruise lines initially enjoyed some pricing power after re-start.  They had fewer ships sailing and were limiting passenger loads.  There were also a large number of FCC's outstanding with limited expiration dates.  Now, as supply and demand approach equilibrium with all ships returning to service and load factors creeping back toward normal we'll see what level of pricing the market allows. 

 

yeah I agree with you totally here. Look at the sad situation of Spectrum of the Seas (nowhere to go), and the sudden increase of Med capacity by Wonder of the Seas (which was destined to Chinese market). Supply is up and in some market is exceeding historical availability highs. The only saving grace is the potential and reoccurring staff shortage so the cruise line can not sell the ship over a certain capacity in case of miscalculated service quality disaster. Personally, I don't really see how demand can meet the over supply in all markets. And with macro economical condition, geo-politics and conflicts, potential recession or even hard landing in the US, devaluation of savings and income due to high inflation...etc etc, some drastic step needs to be taken after this summer to correct the over supply issue. I think demand will be a huge problem after the tides of revenge travel coming to an end.

 

A moment of reckoning is looming for this winter. For all I know, cruise industry as its current form may change forever. If I am not so into cruising and invested I would say get the popcorn ready. But hopefully the market force will let companies like RCL to have a better pricing strategy in order to achieve profitability for the winter to come.

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Well, I've been suggesting Saudi's for nearly a year. Still just rumor but I'm betting Saudi's will be the proud owner of more than just Seabourn. There is just too much debt.

 

https://www.cruiseindustrynews.com/cruise-news/27561-report-carnival-corp-eyeing-seabourn-brand-sale-to-saudi-arabia.html

 

Carnival Corporation may be in discussions to sell ultra-luxury brand Seabourn to the Public Investment Fund of Saudi Arabia, according to a Tweet from CNBC reporter Seema Moody.

 

PS: I've also been saying to watch for MSC make a move on NCL. All just speculation of course, but sadly I've been bang on when it comes to cruise line stock. Shorts are still crushing it.

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  • 3 weeks later...

Silversea Cruises is set to operate the Crystal Endeavor, as the luxury cruise line has acquired the 200-guest vessel, according to multiple industry sources.

 

In addition, Silversea has filed to trademark the name Silver Endeavor (and Silver Endeavour) on June 8 with the United States Patent and Trademark Office.

 

The ship is currently in Gibraltar and could sail for Silversea as soon as later this year following a rebrand, lining up with the 2022-2023 Antarctica season. 

 

The company had previously hinted at expedition newbuilds, and this ship enables the Royal Caribbean Group brand to add capacity quickly in key high-yielding Polar Regions such as Antarctica. 

 

After being delivered to Crystal Cruises from MV Werften in 2021, the luxury expedition ship completed an inaugural Iceland season and a handful of Antarctica cruises before Crystal wound down operations in early 2022.

 

Sources told Cruise Industry News that multiple cruise lines put in bids for the ship, including brands that were not in the expedition market.

 

Silversea Set to Acquire Crystal Endeavor - Cruise Industry News

 

Biker, who is surprised RCCL is spending money on new ships like this - must have gotten a deal.

 

BTW, the stock is below $40 for the first time in 2+ years.

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3 minutes ago, Biker19 said:

Silversea Cruises is set to operate the Crystal Endeavor, as the luxury cruise line has acquired the 200-guest vessel, according to multiple industry sources.

 

In addition, Silversea has filed to trademark the name Silver Endeavor (and Silver Endeavour) on June 8 with the United States Patent and Trademark Office.

 

The ship is currently in Gibraltar and could sail for Silversea as soon as later this year following a rebrand, lining up with the 2022-2023 Antarctica season. 

 

The company had previously hinted at expedition newbuilds, and this ship enables the Royal Caribbean Group brand to add capacity quickly in key high-yielding Polar Regions such as Antarctica. 

 

After being delivered to Crystal Cruises from MV Werften in 2021, the luxury expedition ship completed an inaugural Iceland season and a handful of Antarctica cruises before Crystal wound down operations in early 2022.

 

Sources told Cruise Industry News that multiple cruise lines put in bids for the ship, including brands that were not in the expedition market.

 

Silversea Set to Acquire Crystal Endeavor - Cruise Industry News

 

Biker, who is surprised RCCL is spending money on new ships like this - must have gotten a deal.

 

BTW, the stock is below $40 for the first time in 2+ years.

Probably won't be long now until OBC for having a 100 Shares is no longer offered by Royal when booking a cruise.

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Posted (edited)

I closed all my RCL shorts a few weeks ago. While profitable for me, ultimately I closed them too soon.  I didn't see this drop coming. But at under $40 with a new purchase? I'm thinking of jumping in long. 

Edited by BermudaBound2014
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On 5/24/2022 at 5:04 PM, ChC said:

 

yeah I agree with you totally here. Look at the sad situation of Spectrum of the Seas (nowhere to go), and the sudden increase of Med capacity by Wonder of the Seas (which was destined to Chinese market). Supply is up and in some market is exceeding historical availability highs. 

 

 

No increase in the Med because of Wonder. She was a replacement for Allure.

 

And Allure is well booked in the Caribbean 

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2 hours ago, Jimbo said:

Probably won't be long now until OBC for having a 100 Shares is no longer offered by Royal when booking a cruise.

 

We get a $1000 discount for 100 shares on the World Cruise. Cash, not OBC.

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30 minutes ago, John&LaLa said:

 

We get a $1000 discount for 100 shares on the World Cruise. Cash, not OBC.

Think I would like buy 3 legs get  the 4th leg free better. 🙂

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